Shishir Baijal, chairman and managing director, Knight Frank India, said, "The relatively low impact on mortgage rates will also help support demand from home buyers."
Amid expectations of a modest interest rate hike of 25-35 basis points (bps), the Reserve Bank of India's rate-setting panel on Monday began brainstorming for the next round of monetary policy. RBI Governor Shaktikanta Das will announce bi-monthly monetary policy tomorrow on 7th December.
India's largest lender State Bank of India said in a research report: "We expect the RBI to hike rates by a smaller magnitude linked to emerging markets central banks and the overall rate setting tone in the December policy. -Bps hike looks imminent.We believe that at 6.25 per cent this could be the last rate for now.
Many other experts also expect the rate hike to be in the range of 25-35 bps. The current policy repo rate is 5.9 per cent.
“The RBI may soften its rate hike pace in the upcoming MPC meeting as inflation is expected to ease in the coming months, given that global commodity prices and domestic wholesale prices are nearing the peak seen earlier this year. have softened since. Moreover, as seen in the GDP print for Q2 FY2023, except for the services sector, most of the major sectors like industry, manufacturing etc. saw a decline. We expect the RBI to raise its repo rate by a comparable 30-35 bps in the upcoming MPC meeting, said Shishir Baijal, chairman and managing director, Knight Frank India.
Therefore, a 30-35 bps increase in the repo rate by the RBI would be appropriate in this cycle to address inflation without affecting growth to a large extent.
"From a real estate perspective, the 190 bps increase in repo rate so far has translated into a 105 bps increase in MCLR rates. Mortgage rates have increased in line with MCLR and there has been a cumulative increase in residential sales in the last six months . Slowly started showing some signs. The affordability of home buyers has also reduced by 10% since the beginning of this interest rate hike cycle. Hence, a 30-35 bps increase in repo rate by RBI in this cycle This would be appropriate to address inflation without affecting growth to a large extent. A comparatively lesser impact on mortgage rates would also be helpful in supporting demand from home buyers, as the year draws to a close," Baijal said.
The RBI has hiked the key benchmark lending rate by 50 basis points (bps) three times since June on top of an off-cycle 40 bps increase in repo in May.
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